What should a loan originator NOT consider when qualifying a borrower?

When qualifying a borrower, a loan originator should avoid considering income that is temporary or not expected to continue. This is crucial because lenders typically look for stable and reliable sources of income that will allow the borrower to meet their mortgage payments over the long term. Temporary income, such as bonuses, one-time contracts, or income from jobs that are not secure or are seasonal, does not provide a reliable basis for the borrower’s ability to repay the loan.

In contrast, factors like a borrower’s employment history, income stability, and credit score are essential in assessing their financial health. Employment history provides insight into job stability and potential future earnings, while income stability reflects the likelihood that the borrower will maintain their income level over time. A solid credit score indicates the borrower’s past credit behavior and likelihood of repayment, making it a key consideration in the lending decision. Thus, focusing on stable and ongoing income sources is critical for assessing a borrower’s financial situation accurately.